better to pay off debt OR to have add'l savings?

This sounds like a silly brain exercise rather than a serious real world financial discussion($100 you kidding?). But I'll take this seriously and pose a simple question. Which debt has a lower interest rate(before tax and after tax). The deminimus balance and monthly payment on the student loan debt proves that it's a rounding error in the monthly budget, as one dinner out with the wife could easily exceed it.

Many people have some sort of monthly debt besides their mortgage and maintainance payments. Of course, people want to pay their credit card balances in full, but may not be able to do that each month depending on circumstances. Student loan debt is very common and your monthly payment is very low. If your only monthly debt payment is this low student loan, your total debt is much lower than most people I'm sure.

I have always been afraid of having too much debt, but many people think having some debt is a good idea in that you don't have to wait forever to get the things that you need assuming that you have a stable source of income coming in, as stable as possible in this economy.

OP actually asks a fair question that I'm curious about as well. Since Riversider hates small numbers, let's say I have $1m of debt at a 5% interest rate (so I'm paying $50k per year). I get a windfall / bonus / etc of $500k. Would (1) a board and (2) a lender rather see: (a) no paydown - an extra $500k in the bank (assuming you already meet minimum post-down payment liquidity standards) or (b) paydown $500k o debt - no extra cash but $25k less / year of recurring costs... I assume the answer is it depends on whether you are closer to the minimum standards on liquidity / debt to income vs. on ability to cover monthly charges but appreciate the view of the "experts"

Sorry to offend you with the low numbers, Riversider.

I'm will be looking at properties in the 400K range, so yea, 10K will make a difference.

It obviously makes *financial* sense to keep the 10K in debt that only costs $100/month, but I was asking if it makes sense in the eyes of a co-op board. My gut instinct was that it doesn't really matter, and that the $100/mo will only have a negligible effect on my 4:1/3:1 ratios. Just doin' my homework!

I'm also curious to know: what if the same $10K were credit card debt that costs $300/month. Would it be worthwhile to pay that off? Not my situation but have always wondered.

of course, you would pay off the credit card debt.

The coop/condo wants to make sure that you can pay your monthly maintance as well as cover any additional assessments that may occur. You would need to give more information Basically, the boards are looking at your entire finanicial situation such as how much savings do you have, how long have you been at your job, etc. Your student loan would be a small part of that. Having excessive credit card debt is always a red flag I would think.

Sorry, that was all messed up. Basically the board wants to know who you are financially- where your comes from, how long have you been at your job, do you have substantial savings. reserve, that kind of thing. Definitely the less credit card debt the better.

where your money comes from

ms, keep your student loan debt, pay off your credit cards.

Freebird, if you get $500K at the end of the year, the strongest thing you can do for your co-op app is to use some of it to make charitable contributions.

If you're on the line as far as financial ratios, showing that you reach out to the broader community is going to help you more than keeping 100% of it as extra cash or using 100% of it as debt paydown.

Happy holidays!

ali r.
DG Neary Realty

10K will make a difference
The monthly payment is around $100/mo
-----------------------
100 * 12 = $1200 a year not 10K
and assuming $400,000 property @20% down means a 320,000 mortgage, assuming a 5% rate we're talking
$1717.83 as a monthly payment. You're alreday making a $100 payment on student loans so we're talking $1817 to debts which is 5.8% more than the base payment. But you are already making the $100 payment.

If the 10,00 is principal then the $100 payment implies an 11.627% rate, which means that if you refinance that debt into a 5% rate you're saving pre-tax $47 dollars per month.

$47 hardly seems worth fretting about. The goal should be paying that off and not refinancing it. If you can't pay it off, the home may not be a wise decision. Your budget may be too tight.

The moron who complains about his SS cola adjustment but thinks $100/month swing for a student is beneath him to calculate.... Will now answer thee.

Oh the crown prince of hypocrisy will tell you why his ranting against Barney Franks for this housing bubble and his adamant belief Nyc re going up treasury plus 200bps for 20yrs is in no way contradictory may have the floor. Zeit heil!!!!

Ali, the Harvard Borker will chime in any minute.

To OP. if getting drunk and partying is worth more than 5%. Earnings then party it up. It's my suspicion most posters on SE would rather pontificate on how re is great than have a chloroform three with brad Pitt and Angelina.

really? you have to ask?